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First Milk's chief executive Kate Allum commented,

"While we have still to complete discussions with our liquid processor customers, we have a responsibility to our farmers to show leadership in this situation and remove any uncertainty. On that basis, we have decided to immediately withdraw the planned August price cuts that were put in place as a result of moves by our liquid customers.

"This has been a turbulent time for the whole industry, but unless we immediately grasp the nettle, the progress we are seeing right now will be short-lived.

"Dairy farmers have spoken with one voice over the last few weeks, and they've made it clear that they reject the existing model where they are price takers and favour working together to gain an equal seat at the negotiating table. It is therefore critical that the whole dairy supply chain now looks to develop better structures and relationships for the short, medium and long term.

"We plan to make sure that First Milk plays a leading role in that process."


Dairy Crest acts to seek long-term solution for dairy sector

Dairy Crest is announcing today a further initiative to find a long-term solution for the dairy sector. It is setting aside for two months the milk purchase price cut that was due to be implemented on 1 August.

The delay will give Dairy Crest and its farmers time to continue to work together to seek solutions to the current difficulties that are facing the Dairy sector and are affecting farmers and processors alike.

Two of Dairy Crest’s customers have already agreed to pay a supplement to support farmers. Although all of the additional revenue from these customers will be fed back to farmers it is not enough to completely reverse the previously announced cut. However, in the short term, while discussions with other customers are ongoing, Dairy Crest will make up any shortfall itself.

This builds on a number of previously announced initiatives by Dairy Crest to help mitigate the impact of the price cuts, including:

• Introduction of new contract terms allowing farmers supplying Dairy Crest to move
their milk supply with only 3 months notice following a milk price reduction.
• Giving farmers longer notice of any price changes.
• Appointment of an independent consultant to review the mechanism behind the company’s farm gate milk pricing process.

Mike Sheldon, Milk Procurement Director, commented: “We are in no doubt about the difficulties that the farmers affected by the forthcoming August price cut have been facing. Our bold move to set aside this cut for two months will allow us to continue to work with our farmers to find long term solutions. We remain committed to paying fair milk prices – a commitment fully demonstrated by today’s decision.”


Global markets determine price

Dairy UK director general Jim Begg told the Grocer that “It’s not difficult to see where farmers are coming from with their protests,but this is a market-driven situation and it will require a market-driven solution.” Butter and bulk cream prices had fallen dramatically and had seriously damaged the profitability of dairy companies. He argued that milk processors would have difficulty finding more money until the markets move.

However, a series of polls run by regional newspapers over the last week suggest that the British public is prepared to pay more for British milk and dairy products.

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